RBI cancels the license of Vijayawada-based Durga Co-op Urban Bank

The Reserve Bank on Tuesday revoked the license of Vijayawada-based Durga Co-operative Urban Bank, saying the lender lacks sufficient capital and earning prospects. The bank will cease carrying on banking activities, with effect from the closure of operations on November 12, 2024, the RBI said, adding that the Commissioner of Co-operation and Registrar of Co-operative Societies, Andhra Pradesh, has also been asked to issue a winding-up order to craft. to establish the bank and appoint a liquidator.

On liquidation, each depositor would be entitled to deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

“As per data provided by the bank, 95.8 per cent of depositors are entitled to the full amount of their deposits from DICGC,” the RBI said.

As of August 31, 2024, DICGC has already paid Rs 9.84 crore of the total insured deposits.

Giving details of the cancellation of Durga Co-operative Urban Bank’s license, the RBI said the bank does not have sufficient capital and earning prospects. The country has also failed to comply with the requirements of the Banking Regulation Act of 1949.

“The continued existence of the bank is detrimental to the interests of its depositors. The bank, with its current financial position, would not be able to fully pay its current depositors,” the report said.

Stressing that public interest would be adversely affected if the bank is allowed to continue its banking activities, RBI said that ‘The Durga Co-operative Urban Bank Ltd, Vijayawada’ is prohibited from carrying on the activities following the cancellation of its license. of ‘banking’ with immediate effect.

Banking includes taking deposits and returning deposits.